Dr. Richard Paulus

ASHLAND King’s Daughters Medical Center is asking a federal judge to set aside a court order for the hospital to turn over records in the Dr. Richard Paulus case.

In a Nov. 19 motion, King’s Daughters is asking the order penned by a U.S. Magistrate to be set aside and to have an evidence hearing into whether or not records from a 2012 review into cardiac stents performed at the hospital are protected under a settlement agreement the hospital struck with the feds.

Now the government wants more records, but KDMC said it’s been working under a confidentiality agreement due to the settlement for eight years.

The government accused Paulus of performing unnecessary heart stents in order to bilk Medicare and Medicaid out of money. His conviction was overturned last year after a federal appeals court ruled a letter showing evidence that could have exonerated him was incorrectly barred from his trial.

In the lead-up to his trial, KDMC asked a federal judge to toss out the Shields Letter — named after the attorney who penned it — because it had to do with a confidential settlement. At the time, the judge didn’t rule on the privilege KDMC had or didn’t have, but did rule the letter was inadmissible.

After Paulus’ conviction was overturned, the government asked KDMC to submit records tied into that letter for a review in the judge’s chamber to see what evidence it — and the defense — can use in a second trial.

In October, a U.S. Magistrate ruled KDMC essentially waived its rights to confidentiality when it sent the letter.

According to KDMC, that’s not the case — when it sent the letter to U.S. Attorneys, the two parties understood that it did not constitute a waiver of if its attorney-client privileges.

Contained within the Shields Letter, KDMC points out the attorney wrote:

“As AUSA (assistant U.S. attorney) Andrew Sparks and I have agreed, the disclosure of this information does not waive any attorney-client privilege or attorney work product protection,” the letter states.

Attorneys further went on to argue that Sparks nor his boss U.S. Attorney of the Eastern District of Kentucky Kerry Harvey “ever objected to or questioned the statement in the Shields Letter that AUSA Sparks had agreed that the disclosure of the information in the letter did not waive KDMC’s attorney-client privilege or work production protection.”

KDMC also submitted a letter to the court sent in August 2015, a month prior to Paulus’ criminal indictment, where Sparks asked attorney William Shields whether information contained in the Shields letter could be used in the indictment.

“As I indicated earlier, I do not believe this language violates any privilege KDMC has … nor do I believe this amounts to any waiver the hospital has regarding their review,” Sparks wrote.

Federal prosecutors chose to refrain from including the Shields Letter information in the indictment.

At the 2016 hearing where a judge ruled to exclude the Shields Letter, U.S. prosecutors did not argue that the Shields Letter constituted a waiver of confidentiality, according to KDMC. A transcript from that hearing accompanying the motion backs that claim up.

Finally, KDMC has argued that the government and the hospital entered an agreed order in January 2019 — prior to Paulus’ sentencing — to disclose the letter to the doctor. However, there was a caveat, according to KDMC — it did not waive its privileges with any other documents. Here’s the quote from the agreed order:

“The disclosure of these documents and the information contained in them to the Defendant Richard E. Paulus, M.D., and his attorneys in this proceeding is not a waiver of King’s Daughters Medical Center’s attorney-client privilege, settlement privilege or work product protection in any other federal or state proceeding.”

With all that laid out there, KDMC is also asking a judge to bar the government from arguing that it waived its rights sending the letter, on the basis that it acted like there wasn’t a waiver for eight years.

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